Good day, ladies and gentlemen, and welcome to the Air Lease’s Second Quarter of 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instructions] And as a reminder, this call is being recorded. I would now like to turn the conference over to Mary Liz DePalma, Head of Investor Relations. Please go ahead.

Hello everyone and welcome to Air Lease Corporation's earnings call for the second quarter of 2018. This is Mary Liz DePalma, and I'm joined this afternoon by Steve Hazy, our Executive Chairman; John Plueger, our Chief Executive Officer and President; and Greg Willis, our Executive Vice President and Chief Financial Officer. Earlier today, we published our results for the second quarter of 2018. A copy of our earnings release is available on the Investors section of our website at www.airleasecorp.com. This conference call is being webcast and recorded today, Thursday, August 9, 2018 and the webcast will be available for replay on our website. At this time, all participants to this call are in listen-only mode. At the conclusion of today's conference call, instructions will be given for the Q&A session. Before we begin, please note that certain statements in this conference call, including certain answers to your questions are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. This includes, without limitation, statements regarding our future operations and performance, revenues, operating expenses, stock-based compensation expense and other income and expenses item. These statements and any projections as to the company's future performance represent management's estimates for future results and speak only as of today, August 9, 2018. These estimates involve risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our filings with the Securities and Exchange Commission for a more detailed description of risk factors that may affect our results. Air Lease Corporation assumes no obligation to update any forward-looking statements or information in light of new information or future events. In addition, certain financial measures we'll be using during the call, such as adjusted net income before income taxes, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on equity are non-GAAP measures. A description of our reasons for utilizing these non-GAAP measures as well as the definition of them and the reconciliation to corresponding GAAP measures can be found in the earnings release and 10-Q we issued today. This release can be found in the Investors and Press section of our website at www.airleasecorp.com. Unauthorized recording of this conference call is not permitted. I would now like to turn the call over to our CEO and President, John Plueger.

Well thank you, Mary Liz. And good afternoon to all of you and thank you for joining us. I hope you all are having a nice summer. I am happy to report that ALC had another good quarter, executed right on plan, achieving revenues of $398 million and $1.04 earnings per share. Our balance sheet grew to $17 billion, increasing more than 10% over the past six months and our net income rose 14% over last year’s second quarter. Our margins and portfolio metrics remain strong and consistent. In light of tax reform benefits, and ongoing Airbus delivery delays, we continued opportunistic asset growth, by concluding the purchase of four young A321s in the secondary market near the last day of the quarter. And as you know, we purposely did not sell any aircraft during the first or second quarter, due to the benefits of tax reform and the high volume of sales that we have recorded over the past two years. So, for quarter one and quarter two, we concentrated on asset growth. And to that point on growth, we are very excited, because over the next 18 months Air Lease will achieve the highest CapEx growth since its inception. Accordingly, we will see significant growth in assets, revenues and earnings. Between now and the end of 2019, our current schedule shows delivery of 109 new aircraft from our order book, with CapEx of $8.5 billion. Each of these 109 aircraft are already spoken for today by an existing or new ALC customer. In 2019, alone, our CapEx is forecast to be about $6.4 billion as compared to our expected final total CapEx for 2018 of about $3.9 billion. With the company’s strong balance sheet, liquidity and investment grade capital market access, ALC is more than well prepared for…

John, thank you very much. As our second quarter results indicate, our business is very solid and the ALC team continues to work hard building the best in class fleet on long-term leases to our global airline customer base. Over the past eight years we’ve built a strong foundation for our business that is vital to the company's success going forward and all levels of our organization are ready for the growth ahead of us firing on all cylinders. Our ongoing conversations with the airlines provide us key intelligence as to what is being seen in the marketplace. We are receiving real time picture of what our airline customers are experiencing. Our dialogue indicates that globally airlines are broadly healthy and remain optimistic about the current operating environment despite more recent stresses of increasing interest rates and fuel costs. IATA reported this morning that in industry wide revenue pass through kilometers increased 7.8% year-on-year in June of 2018 versus June of 2017 and increased 7% for the first six months of 2018. Solid passenger traffic trends continue to set the important tone driven by low fares on the LCC and ULLC carriers, and we are at ALC experiencing a solid demand environment for available delivery positions from airlines throughout the world. Regionally, European RPK growth is up 6.3% year-to-date, with load factors around 83%. We attribute this to long haul and intra-European travel growing as a result of stimulation by low cost and low fare traffic. As we have done a number of other placements and deliveries in Europe recently, we continue to strive forward in this area. In addition to the SAS placement John mentioned, we delivered two 737-8 MAX aircraft and one new 787-9 aircraft to LOT Polish and one Boeing 737 MAX aircraft to Travel Service. It…

Thank you, Steve. As mentioned earlier, we recorded another great quarter, reporting diluted earnings per share of $1.04, an increase of 13% over the prior year. The results of the second quarter were largely driven by our aircraft activity and tax reform. Given approximately half of our CapEx occurred in last two weeks of the quarter, we will receive the full earnings benefit from these aircraft next quarter. After adjusting for timing of deliveries, you can see that our portfolio lease rate factor AAH and lease term remaining all held constant on a weighted average basis. We continue to benefit from tax reform through the reduction of our effective tax rate at 21.8% as compared to 35.3% in the second quarter of 2017. The strong earnings generated by our young fleet on long-term leases coupled with our highly efficient platform allowed ALC to achieve a 37.1% pre-tax margin in the second quarter and a 15.4% pre-tax return on equity. ALC generated revenue totaled revenues of $398 million in the second quarter, up 4.4% year-over-year, largely driven by the growth of our fleet, with rentals comprising $393 million of total revenues. We had a record quarter in terms of CapEx, and with we purchased 18 aircraft, representing $1.4 billion, which is the highest in our Company’s history. Turning to expenses, interest expense increased primarily due to the rise in our average debt balances, which track the growth of our fleet. Despite the rise in prevailing interest rates over the last year, our composite rate only increased 24 basis points. This is primarily attributable to us maintaining a very high level of fix rate debt. We also continue to see our interest rate adjusters kick-in on our new aircraft deliveries, adding to our base lease rates. Turning to SG&A, our operating efficiency…

Thanks, Greg. This concludes management's remarks. For the question-and-answer session, each participant will be allowed one question and one follow-up. Now I'd like to hand the call over to operator to open the line for the Q&A.

Thank you. [Operator Instructions] Our first question comes from Jason Arnold with RBC Capital Markets. Your line is now open.

Hi, gents. Good afternoon. You touched on this already in some of your comments a bit, but maybe you can expand on the Boeing order, kind of selection of aircraft types and how you strategically timed your order. I'm assuming there is some game theory at work there. But would certainly love to have your perspective as well.

Well, the order was Boeing really satisfied two objective, one is we've seen significant demand our airline customers for the 737 MAX family. We felt that we did not have sufficient number of MAXs on order to satisfy our airline requirements. And we also saw additional pickup in demand for 787-9 across a wide spectrum of airline customers. So part of the order is to satisfy demand that we see from our customers across the globe. The second part of it was to make sure that the transaction is economic and we worked very hard was Boeing to make sure that the pricing and the other economic benefits to us were superior to anything that we've done in the past, and enabled us to basically rework a lot of the existing contracts that we have with Boeing in a mutually satisfactory way. So the end result is very beneficial, because in effect, we now have 213, 737 MAXs on order. We have the ability to take 55 of those and work with them on a later stage and reconfirm them in an orderly manner. So it gives us flexibility. So overall, the transaction is very, very attractive for the company and for our shareholders.

We can tell you also that those positions, the key delivery positions where we focus a lot of our energy in negotiation were disappearing in 2023 and 2024. And we wanted to make sure to preserve our competitive advantage by getting those best delivery positions.

Excellent. So good delivery positions and good price, that's a good combo. Okay, thanks. And then just as a follow-up, I guess, I was curious if you can comment on the secondary market demand for aircraft. And then, given that you've been holding back on dispositions a bit here in 1H 2018, obviously, Thunderbolt now there will be some more sales, but just curious how we should think about the pace of dispositions beyond those Thunderbolt sales into the back half of the year and then into 2019 here as well?

Jason, we have a good problem on that regard. And that good problem is that we have more buyers coming to us still than really we have aircraft to sell that’s a one of our most frequent discussions and as a management team is how much we should sell. So, yes, as we telescope to all of you, we held off in the first couple of quarters, our debt to ratio is now back up to 2.53, after finishing 2.3 something at the end of the year. So we’ve been deploying that capital quickly, efficiently and smartly. So I think beyond Thunderbolt II, which we felt great about, we continue to have a further aircraft sales opportunities, you may actually see one or two more before the end of the year outside of Thunderbolt. We actually have a number of people now coming to us actually from Asia more or so than before looking to new portfolio sales, et cetera. So frankly we’re in a very good position, it’s much more a decision for us as a management team as to when we’re going to sell and where. T-bolt I sort of have an average fleet age of about 12 years. T-bolt II was right about eight years and as you know eight year is our sweet spot. So we don’t want to dig too much younger than that. And we’ve sold the aircraft largely all of them that are in that midlife space now. So I think it’s all rose looking out. And as I said in remarks our challenge and our duty to the shareholders is a balance growth, gain on sales and strategy.

Super, thanks so much for color and keep up the great work.

Thank you.

Thank you. Our next question comes from Moshe Orenbuch with Credit Suisse. Your line is now open.

Great, thanks. Given that you will be affecting those sales, much of the sales of the Thunderbolt in the second half. And as you think about kind of the state of play within the industry, do you think there will be opportunities to add more planes kind of like you have done over the last couple of quarters? I mean, how do you think about that in terms of -- as you kind of think about the industry opportunities your leverage and that those pending sales?

Yes, we have -- as John indicated we have 109 aircraft on firm order between July 1st of this year and the end of next year, representing about $8.5 billion. We also have this T-bolt II sale and we have already begin to plant to seeds internally on evaluating the T-bolt III portfolio sometime in the second half of next year. So we’re looking actively at balancing our existing incoming new aircraft and whether there are opportunities to do one of two things. Either buy some incremental new aircraft or more some delivery positions forward. So we’re actively discussing various scenarios, but we do have a very active and full order book for the next 18 months. This will be the fastest growth rate of Air Lease, both in terms of revenues and assets that we have experienced since the company was formed. So we are busy, we have all those aircraft placed, but we’ll always monitor opportunities to pickup airplanes, very young aircraft and additional new aircraft as those opportunities arise.

Great, thanks. On kind of almost in the opposite direction, there were some press reports in the last couple of days about some delays from Boeing on the 737 family. Is there I mean anything you can kind of flash out with respect to that?

Yes, I mean, we have actually -- they are not significant. We have been notified on two aircraft of basically one month or less delivery delays, so that’s really not significant whatsoever. It wouldn’t surprise me if there is some level of delay by the Boeing Company on MAXs, but frankly it tails in comparison to where it is at. So, from Air Lease’s perspective, as I said, some pretty small notices, one month delays on two different single aisles or less. So, so far I think it’s pretty well under control.

Okay, thanks so much.

Thank you. Our next question comes from Michael [indiscernible]. Your line is now open.

Hey guys this is Kishan for Mike. Have you guys seen outsize demand for any particular type of aircraft and to any particular region of the world?

No, I think it’s a great broad and consistent demand. We are seeing a lot of activity in Europe, both with legacy airlines and with the low costs short haul and low cost long haul carriers. We are seeing a lot of demand in South Asia, Southeast Asia, North Asia. We are seeing demand from some of our North American customers. Even Middle East, we’re seeing some airlines looking at upgrading their fleet. So there is no single region that I would say is currently not evaluating on a modernize and grow their airline fleet.

Got you, and then on the flip side of that, any regions where there is particular weakness or not really at this time?

No I mean, I think look Argentina has had some well publicized currency challenges. I think there is a lot of -- there is ample capacity on the aircraft side in Mexico, so not whole lot of activity there. But I would also add on top of Steve’s comment a reminder and that reminder is that we continue to place wide body aircraft at a good pace, we’ve had a lot of wide body announcements this year and last year. So the new wide body space that we’re in from our new aircraft placement perspective is actually doing well. And on that note we forecasted that in 2021, 2022, and 2023, these are heavy years, where you’d be getting the oldest 777-300s and the youngest 777-200 for example retiring quite a bit from the fleets as they are north of 20, 22 years of age. And we think that this is going to accelerate wide body demand in that period.

Got you, thanks a lot guys.

Thank you. Our next question comes from Vincent Caintic with Stephens. Your line is now open.

Hey, thanks. Good afternoon, guys. So first question, it’s nice to see that the order book continues to be placed out with that locked-in CapEx. If you could remind us and describe the conversations you are having with the airlines that lead to such a long locked-in lease commitment through 2021. And then if you could give us a sense of those economics of the -- those leases that you placed what kind of spreads lease terms and any economic difference you see versus the current portfolio?

Well I mean Vincent, there is no magic here. We're doing what we've always done. I think the fundamental driver for everything is [technical difficulty] and aircraft replacements. And so we are farther forward, I think place that we've ever done so before and it's just simply a question of that demand out there. I would say we have another good problem in this regard and that often times we could actually accelerate at an even faster pace if we wanted to. But we need to have product on the shelf. We need to have aircraft available for ongoing campaigns, pop up situations if they need. We have a lot of strategic airline considerations in how we want to grow our relationships going forward. So the truth of the matter is we could place even farther if we wanted to, but it’s that balance again between having enough available on the shelf. So as long as we have the fundamental increased RPK growth, we're in a very strong environment and our decisions internally are guided to how much do we want to place and how much do we want to withhold. In many ways it's the same situation with the OEMs, Airbus and Boeing. They keep a certain number of aircraft sort of positions on reserve for key campaigns as they know that they're unfolding. And to some extend we do the same in our order book going forward. That's as simple as I can explain it.

And I just want to emphasize that a lot of our placements for multiple aircraft are over a several year period. So for example, we could write a lease with an airline for seven aircraft, two of which we would deliver in 2020, three in 2021 and two more in 2022. So many of these transactions cover a multi-year period of deliveries.

Yes, and the nice part about this again just looking more broadly. We build our business much like any other business on the planet. And that's probably repeat business with our customers and we're getting more and more requests for incremental additional aircraft to those customers. But at the same time, we are very cognizant of risk. And that needs customer concentration, that's where Blackbird capital for example has become very valuable to us, because a lot of the aircraft that we put in Blackbird or are going into Blackbird, et cetera help with our risk and concentration exposure. So it's a perfect complement going forward as we balance all these issues. The hardest thing to do is to tell a good customer that you're full up on them. We don't want to give that business away to other leasing companies that we don’t have to, and that's a tool that Blackbird is there for us for.

And thanks for your question.

Okay, thanks. Is there --- if you could maybe also talk about the economics of those leases? Are they similar, better than your -- the current portfolio?

Yes, they're consistent with what we're seeing in the fleet today. I mean, we don't give guidance on what we're placing in the marketplace, but for long-term purposes they’re in line.

Okay, perfect. And just one quick one, just noticed that the SG&A expense levels were down materially quarter-to-quarter and year-over-year so had a nice 5.4% rate. Just wondering if that’s sustainable going forward if this is one thing that was one-times for the quarter? Thanks.

I think you’ll see things bounce around from quarter-to-quarter. We expect there will be further expenses flowing through next quarter with the Thunderbolt II closings. But by and large there is no change in our position that overtime revenue growth will outpace SG&A growth.

Great, thanks so much guys.

Thank you. Our next question comes from Scott Valenitin with Compass Point. Your line is now open.

Thanks for taking my question. With regard to new technology and higher fuel prices, are you seeing increased demand or increased lease rates as a result of the higher fuel prices?

We're beginning to see an uptick on aircraft that airlines are sort of scratching their heads on whether to hedge fuel and guessing where oil prices are going, but I think the general consensus now is that oil prices are firm and if anything they will move slightly in the northward direction. And so I think that's reflecting in the demand for fuel-efficient aircraft and consequently as John said with the shortage of good delivery positions. We are beginning to see an uptick in lease rates going forward.

Okay, thanks. And just one follow-up, with the CapEx plan ahead, I assume you guys will be more at the high end of the 3x debt to equity ratio, kind of 2.5 to 3 level, that you guys talked about?

No, there is no change in our target debt to equity ratio of 2.5 to 1.

Our target is 2.5, we have $200 million of convertible debt that we anticipate will become equity later in the year. We continue to reinvest the retained earnings in a company. So we are not planning to diverge away from our stated policy target of 2.5 to 1 debt to equity ratio.

Scott you will see quarter to quarter variations, we have peak deliveries for example, usually in our second quarter. So normally that quarter sometimes the third but, these are the second quarter, where usually peak above that 2.5, but again concluding the year 2.5 is our guideline and that’s we think we’re going to be.

And we’ll also work very closely on fine tuning our aircraft sales to make sure that we manage the balance sheet efficiently and prudently to stay within those parameters.

Alright, thanks very much.

Thank you.

Thank you. Our next question comes from Helane Becker with Cowen. Your line is now open.

Thanks very much, operator. Hi team, thanks very much for taking my question. I appreciate the time. Just a balance sheet question for Greg, since you seem not to be getting too many, the cash position went down, the respected cash position went up and flight deposit seem to have gone down. Can you just -- is that just related to deposits or the fact that’s aircraft closings came so late in the quarter. Could you just like go through that for me, please.

Yes, we’re not -- there is nothing to be said about the cash position going to 259 versus 292 at the end of the year, we still have a significant amount of liquidity. I would expect that as we entered into a very heavy quarter in terms of CapEx, so you’d see some decrease, a slight decrease in deposits. And then as we go into heavier quarters there will be an accordingly increase in the deposit line item.

But Helane actually security deposits that we have from airlines went up from $856 million at the end of last year to $933 million at June 30th. So we have more cash from our airline customers that we’re holding.

Okay, that’s great. And then any repositions that you had to do in the quarter or aircraft replace with other airlines.

No, we had not.

No, there was no default or repositions or anything like that.

Okay, that’s very helpful. Thanks everybody.

Thanks, Helane.

Thank you. Our next question comes from Mark Streeter with JP Morgan. Your line is now open.

Good afternoon everyone, I love that conviction on the 2.5 times debt equity, you are now moving of that, good for you guys, that’s music to my ears. But that’s not my question, wondering if you can talk a little bit about in terms of Thunderbolt and Blackbird not getting into the details I look forward to the deeper dive, and congrats Steve, John to you to Greg Ryan, on what you have built there, I think it’s wonderful. But I am wondering, how you’re going to feed the beast, you mentioned maybe second half next year, doing another Thunderbolt transaction, but as you have these side cars, up and running and becoming more efficient with a lower costs of capital, does that allow you to look at more maybe mixed portfolios of aircraft and be more aggressive in the secondary market to bring in maybe more portfolios where you can peel off a portion into Thunderbolt. Or obviously -- go ahead.

Let me just comment, Mark, I understand that. So it’s kind of a mix question. The answer is yes, we do have a capability to look, but I think one of the things that these investors like the most is that these are ALC picked aircraft and ALC leases. They like both and they like our name, as originators of the documents as using our methodology, et cetera, et cetera. So, it remains to be seen whether we can really find something of a meaningful size and scale over and above, what’s coming out of our fleet. We take new aircraft to deliver all the time, and as we take new aircraft every current aircraft in our fleet does age. So we do think this is a typical [ph] platform.

I would pause a little bit yet on whether we should go out and acquire other sort of non-ALC originated aircraft. I just think that our investors will -- may pause on that, and this is a product that is really optimized for ALC -- the Thunderbolt is optimized for ALC and its shareholders. And so, things will go more towards investor demand and appetite as we've learned a lot now from this Thunderbolt II transaction and in the process that we've used it. But Mark, let me amplify little more to respond to your question. Last year we purchased 11 737-800s that were built in 2010-2011. All those aircrafts are leased to different airlines. This year in Q2 we purchased four A321s that were built in like 2013, 2014, 2015 timeframe. Some of those aircraft, even though we didn't acquire them new will become potential candidates into future transactions such as a Thunderbolt III. So we do have some aircraft that we acquired that were not new aircraft that are candidates to eventually go into one of these structures, but in our fleet now. In our fleet now

I think we need to walk before we can run. I don't think there's an intention for us to originate to distribute like you're implying I think it is a great platform for us, we'll continue to monitor it and continue to pursue deals as they present themselves.

And also we want to maintain a healthy balance, nice equilibrium between the number of managed aircraft and the number of owned aircraft. So we're trying to optimize that balance as much as we can going forward.

Okay, great. That's helpful, that distinction. And then just a follow-up for me, just on the new middle market aircraft, I know engine proposals were due last month and so forth. I'm just wondering if there's any update Steve and John, in terms of your willingness to get involved in that program, maybe earlier than your lack of involvement? Right now, for example, in the 777x, which I know is still too far out for you, you don't want to put those PDP money to work so early, but I'm wondering is the NMA sort of a different ballgame for Air Lease?

Well, Steve, commented already that frankly, I mean, we're really in a deep dive with Boeing as we speak Mark. So we can't really comment too much technically. But we are really in the weeds and revaluing aircraft we said at the Farnborough Air Show very publicly that there is broad based strong interest in this aircraft from a number of airlines globally, both legacy carriers and Boeing is also targeted a number of LCCs and ULCCs. So all I can say is we continue to evaluate and watch all of these aspects and work closely with Boeing and we’re not shy with our views on Boeing on all aspects of the aircraft.

Yes, so as John says, we’re in a deep dive valuation. We’re working with the engine guys to understand exactly how their proposals would interface with the airframe. We had exhaustive discussions with the OEMs and Boeing on this airplane as the design evolves, and they’re asking for a customer inputs from our airline customers. So there -- it’s a very interactive process that’s been ongoing for some time. And the same thing is true with Airbus on the longer range versions of the A321. And as I said earlier, we were the launch customer of the A321 LR, we're the largest customer of the A321neo family and we’re working with Airbus on looking at the XLR as sort of a replacement of the 757.

There is a key difference Mark. The 797 NMA has not been launched. Whereas the 777x or 9x has been launched. So when you are talking about our involvement, it’s actually impossible for anybody to order or pre-order. So all we can do is tell you our detailed involvement with Boeing.

Yes, I was just wondering if there was anything philosophically different about the program in terms of a willingness to -- and I know you’ve been involved in the 777x development yet you weren’t a launch customer for that it seems like you’re implying that sort of the coast is clear for you to be involved with the NMA. If the specs come out in the price comes out to your satisfaction. So that sound like there’s any roadblocks in the way for that?

No, and as you call even back at aisle C, we were a very large customer. In fact, we’re the largest lessor of both the 757 and the 767 families. We had -- my recollection is over 130, 757s and 767s that we bought from Boeing. So this space of 210 to 280 seats is a sweet spot and we will continue to work very closely with Boeing and the engine guys to make sure that whatever they design and build meets our client's requirements.

Great, thanks for the clarity. Appreciate it.

Thanks, Mark.

Thank you. Our next question comes from Rajeev Lalwani with Morgan Stanley. Your line is now open.

Good afternoon, guys.

Hi, Rajeev.

Question for you John on the used side, you made a couple of comments earlier. Can you just talk more about what's driving the interest on that side of the market? Is it just delays with some of the aircraft out there? Is it something else? And then relating to it, I think Steve was talking about just how your fuel supporting Neos and MAXs and some of the next generation aircraft. Is higher fuel impacting the value at all for the used side doesn't seem like if it.

So, I mean, if you're talking about the incremental used aircraft that we've been acquiring not just in Q1 and Q2, but all of the last year as well. These are largely driven by our customer relationships. Most of these are not any RFPs or sale leasebacks. We talk to our customers and find out which ones may want to offload some aircraft and where we can fill holes and plug gaps and be a good problem solver for our customers. And that's where most of them are arriving on our doorstep is through our active engagement, Steve commented on our hourly and daily dialogues with all of our customers, that's where they're coming from and that's where we're finding we think good value opportunities and a chance to help our customers at the same time. That just continues as part of our natural method of doing business. And so those incremental opportunities are continuing, but we have not as you'll see from valuations that we've done in all the aircraft we've sold, there is no I would say residual value and material concern or degradation, et cetera. I would just say the fuel prices now are a little bit more on the radar about maybe 8 to 10 months ago they were off the radar, but they're now on the radar and to Steve's comment, I think that's meaning we're seeing a little indication in an uptick on the lease rate side for the newest ones.

Okay, thanks. And then I think you -- when you were talking about some of the aircraft orders that you're placing, you highlighted the Pratt & Whitney I think it was a GTF. Can you talk about just your comfort level with the engine just given all the headlines out there and concerns?

So to be clear in my remarks, all we did is we have 60 of our next 320-321neos that are in our current order book that needed engine allocations. And so we did provide those engine allocations both to CFM the leap and to Pratt & Whitney. We believe that Pratt's technical problems are resolved and we believe also that Pratt & Whitney's production capability has improved. However, I must say that where we are concerned and where we're a little watchful is incorporating those engines as they get delivered to Airbus incorporating them and back on to aircraft. And then it's not just bolting the engines on to the airframes it's actually putting that whole aircraft then back into either final assembly or the delivery process. And that's creating quite a challenge for Airbus. So from the engine technical and production capability side, I think progress has been made. From the fixing it sort of side and the delivery delays on Airbus side, I think we're very watchful.

Very helpful. Thanks, John.

Thank you very much.

I show no further questions in queue. So I'd like to turn the conference back over to Mary Liz DePalma for closing remarks.

Okay, thank you everyone. That's it for our call today. We look forward to speaking with you after the conclusion of the third quarter. James, thank you and you can now disconnect the lines.

Thank you.